CHAPTER CONCLUSIONS
Mental health services provided by Heartland Human Services (Heartland) were affected the most by the strike. The Department of Human Services’ mental health grant funding for Heartland (excluding the fee-for-service funding) remained fairly constant between FY07 and FY08: $664,686 and $635,417, respectively. However, fee-for-service funding decreased significantly from $1,700,074 in FY07 to $701,404 in FY08, primarily because Heartland was unable to provide certain services for a portion of FY08 due to the strike. Medicaid funding decreased from $1,511,124 in FY07 to $621,328 in FY08. Non-Medicaid funding decreased from $188,950 in FY07 to $80,076 in FY08. The combined reduction in Medicaid and Non- Medicaid in FY08 was $998,670.
The Department of Human Services (DHS) continues to work toward converting funding provided to mental health providers from a grant based system to a fee-for-service basis. The conversion that began in FY05 was not completed by the end of this audit. The agreement between DHS and Heartland lists the method of payment as “Grants” for all 10 mental health programs funded by DHS in FY08. For the 10 mental health programs funded in FY08:
• 8 capacity grant programs provided advance funding to Heartland which is primarily to be used for expenses, such as payroll, facility expenses, etc. Most grants have requirements on how such funds are to be used – such as 80 percent of funding must go toward personnel costs; and
• 2 grant programs (Medicaid and Non-Medicaid) are treated as “fee-for-service” programs by DHS. Funds are advanced to Heartland for these two programs, and Heartland is required to submit bills on at least a monthly basis for billable services funded by the Medicaid and Non-Medicaid contract amounts. However, even though Heartland submits bills to DHS for the services it provides, Heartland is not
reimbursed or funded based on these billings. Rather, due to the reconciliation method used by DHS, which is discussed later, DHS has generally been allowing providers to retain any excess Medicaid funding even though it may not be supported by billings.
Statewide Issues
During our review of Heartland’s use of State funds, as well as the State’s monitoring of Heartland’s use of such funds, we identified several Statewide issues. These issues not only
impact Heartland, but likely impact other DHS providers as well. These issues not only result in noncompliance with administrative rules and grant agreements with providers, but also limit DHS’ oversight, as well as the transparency of the providers’ use of State funds. DHS officials stated that many of the Statewide issues discussed below are the result of the Department’s attempt to comply with the provisions of an FY05 Memorandum of Understanding which is discussed later in the chapter.
1. DHS did not provide adequate guidance to providers in order to complete their Consolidated Financial Reports (CFR).
Due to a lack of guidance by DHS, Heartland did not allocate expenses directly to each mental health program specified in its agreement. As a result, it is not possible to determine whether expenses are being allocated to the DHS capacity grant, Medicaid, or Non-
Medicaid portion of Heartland’s funding. Heartland’s Medicaid, Non-Medicaid and grant funds are lumped together to fund the mental health services it provides. This commingling of funding types, along with the limitations in DHS’ reporting requirements, makes it difficult to track and account for the funding received by providers.
Based on our discussions with Heartland, as well as DHS officials, much of the difficulty in tracking and reporting the use of funding from DHS relates to the way the Medicaid and Non-Medicaid funding is allocated. DHS allows providers to use Medicaid and Non- Medicaid funding not only for the specific Medicaid and Non-Medicaid grant program, but also to pay for services provided in other capacity grant programs, such as community integrated living arrangement (CILA) or Crisis Services. In FY08, Heartland allocated Medicaid and Non-Medicaid grant funds among four of its DHS grant programs (Crisis Services, MH CILA, Gero-Psychiatric Services, and Medicaid/Non-Medicaid) based on the actual services it provided.
Since DHS does not require mental health providers to submit expenditure reports that document how grant funds were expended, DHS does not have any specific support for how the grant funds were expended. For example, many of the grants require that at least 80 percent of the grant funding shall be used to support salaries and benefits. Without these grant activity reports, it is unclear how DHS monitors this requirement.
Since financial reporting to DHS was not done by the program titles that were listed in the grant agreement, it is not possible for DHS to determine whether Heartland met performance and allowable cost requirements by program as required by the grant agreement. In order to determine how DHS monitors compliance with contracts and grant agreements, DHS was asked how it determines what is spent by program. A DHS official agreed that it is not possible to track spending by program. This appears to be a statewide issue and is something that is not being monitored adequately by DHS.
2. Due to the way DHS reconciles mental health grant funding, providers have been allowed to keep funding for programs that was not reported as expended.
Due to the way DHS’ Office of Contract Administration reconciles the funding DHS
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mental health funding that was not reported as expended. Since FY05, DHS’ reconciling of funding provided to mental health providers has not met the requirements of the Illinois Administrative Code or the grant agreements. Additionally, DHS continues to reconcile based on special instructions that were used for completing the FY05 grant report. Since FY05, the Department of Human Services/Division of Mental Health has been working on converting mental health providers from being funded through grants to being funded by fee-for-service. Although DHS/DMH has been working on the conversion since FY05, the conversion has not been implemented as of the end of the audit.
As a result, in FY08 several of Heartland’s programs (Client Transition Subsidy, Psychiatric Medications, and SASS Flex) had expenditures that were less than the grant funds received. In these instances, Heartland was able to keep the funding due to DHS’ reconciliation process that has been used since FY05.
In the time period between fiscal years 2005 through 2007, Heartland had “unearned income” from State moneys totaling $490,883. While it is clearly not the intent of DHS to recoup all of the “unearned income” providers have realized as a result of the conversion to fee-for-service funding, this method of reconciliation may be resulting in providers retaining funding which is truly excess, and which has not been spent in accordance with the grant agreement, and which should be returned to the State.
3. DHS did not ensure that mental health providers were reporting interest earned on its grants.
Heartland’s FY07 and FY08 reconciliation documentation provided by DHS’ Office of Contract Administration did not show that Heartland earned any interest on the $3,701,781 in funding received for mental health programs over the two year period. The Grant Funds Recovery Act requires that interest earned on grant funds held by a grantee shall become part of the grant principal. Additionally, the Division of Alcoholism and Substance Abuse (DASA) and the Division of Rehabilitative Services (DRS) did not require Heartland to calculate interest earned and repay interest earned on unspent advance funds.
Heartland Specific Issues
During the audit, we identified several issues related to Heartland Human Services. These issues include:
• Heartland’s use of Crisis Services program funding did not comply with its grant agreement. Heartland received an $85,790 grant for Crisis Services in FY08. The agreement required that 80 percent of the grant funding (or $68,632) be used for salaries and benefits. Based on Heartland’s FY08 CFR, Heartland only spent $58,679 on salaries and benefits allocated to the Crisis Services program, which is 68 percent of the grant amount.
• Heartland allocated $145,492 in revenue to the Crisis Services program in FY08 ($128,683 in DHS funding and $16,809 from non-State revenue), but only reported $82,507 allowable in expenses for the program. The excess revenue
allocated to the Crisis Services program resulted from Heartland applying fee-for- service funding for the services it provided for this program. While DHS’ method of funding forces mental health providers to allocate fee-for-service billings to its grant programs, the grant agreement requires that the fee-for-service funding should not be submitted for the same services and activities funded by the grant. • Based on a review of Heartland’s case notes, we determined that Heartland
employees need to be more specific when documenting services provided to allow reviewers the ability to ensure entries are not duplicated.
• From a sample of expenditures from FY07 and FY08, Heartland allocated $6,523 in expenses to State programs that were not necessary or related to Heartland providing its State funded program services as outlined in 89 Ill. Adm. Code 509.20.
• Heartland did not have adequate documentation for a few of the purchases that were reviewed. These included bills for hotel stays and toner cartridges.
State Agency Monitoring
The Mental Health Program Manual and grant agreement have very few monitoring requirements. Both contain a list of activities that the Department’s monitoring “may consist of.” However, none of the activities are required and nothing delineates the frequency of the reviews to be conducted. Although documented requirements for monitoring were limited, the Division of Mental Health (DMH) provided documentation of numerous monitoring activities during fiscal years 2007 and 2008. From our review of the documentation provided by DMH, it appears that DMH was in frequent contact with Heartland and monitored the strike as necessary. According to a DMH official, Heartland was in compliance with all notifications and reporting requirements.
DHS’ Bureau of Accreditation, Licensure, and Certification (BALC) conducted a site visit from October 6 through October 9, 2008, of the CILAs and a sample of current client records on file. Heartland received two separate scores on the BALC Survey Report Form. Heartland received a 97 percent for the CILA portion and all three CILA sites were visited. Heartland scored 75 percent on the Medicaid Community Mental Health Services portion. According to a BALC official, these scores are average in comparison to providers similar to Heartland.
DHS’ Division of Alcoholism and Substance Abuse (DASA) and Heartland exchanged numerous e-mails relating to the strike and Heartland’s ability to provide DASA services. The e- mails included a notice by Heartland on June 28, 2007, of the impending strike. The e-mail was from Heartland’s Executive Director and stated that she had been notified that the strike would begin on July 2, 2007, at 8:15am.
DASA performed a post-payment audit of Medicaid and grant/fee-for-service billings on June 16, 2008, for services provided during FY07. DASA also performed a post-payment audit of Heartland’s Alcoholism and Substance Abuse Treatment and/or Intervention Services
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program(s) on November 1 and 2, 2007. This audit covered FY06 billings. DASA identified $674 in billings subject to recoupment.
The Division of Rehabilitative Services’ (DRS) Procedures Manual requires monitoring of programs through monthly performance monitoring, site visits, billing reviews, and group billing reviews using random sampling. According to DRS officials, monthly performance monitoring is conducted by reviewing the Group Billing Sheets that are submitted by Heartland monthly. DHS provided a January 2007 Group Billing review in which the reviewer found that the services are well documented and noted no concerns. A site visit was conducted in April 2008. However, since no services were provided and no funding was expended by Heartland, there was nothing to review.
DHS’ Division of Community Health and Prevention monitors Heartland’s Addiction Prevention Services by requiring Heartland to submit Annual Work Plans and Annual and Semi- Annual Evaluation Progress Reports and by requiring quarterly reporting of service data. In addition, DHS conducted a site visit of Heartland on November 13, 2007. The site visit had no findings and required no action by Heartland.